Romney tax plan offers best means of getting economy on the right track
by Barbara Anderson


The Salem News
Thursday, March 1, 2012


So there I was, a day before Mitt Romney formally presented his "Restore America's Promise" tax plan to the Detroit Economic Club, discussing its provisions with the Romney campaign and with my friends at the National Taxpayers Union and Americans for Tax Reform.

I learned enough to be able to honestly state in a telephone news conference that it's good to see a serious plan to fix the economy, to reassure job-creating businesses that someone is on their side who recognizes the value of stability in the tax code.

Those who pay their business taxes using their individual tax forms have long complained about the Alternative Minimum Tax (AMT), another one of those tax hikes "on the rich" that was enacted so long ago it has now dribbled down to the middle class. The Romney plan would repeal the AMT while cutting marginal tax rates across the board for all taxpayers.

In fact, all the Republican candidates would repeal the AMT, while President Obama would continue to allow it to increase taxes on small businesses you know, the ones we need to start creating more jobs.

 
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But all of the candidates, even the president, propose cutting the corporate income-tax rate.

Remember when President Reagan visited Massachusetts, stopping for a beer at the Erie Pub on his way to meeting with high-tech executives at Millipore? I was at that meeting, and can tell you that it was a surprise when he impulsively said he'd like to repeal the corporate income tax to stimulate the economy.

Since then, the 35 percent U.S. corporate rate has become more obviously out of sync with the lower corporate rates of other industrial countries, making us even less competitive.

So President Obama would cut the rate to 28 percent, Mitt Romney to 25 percent, Rick Santorum to 17.5 percent (0 percent for manufacturing concerns), and Newt Gingrich to 12.5 percent. Ron Paul would repeal the 16th Amendment to abolish all income taxes, while focusing on the sales tax for revenue to fund his constitutionally limited government.

We can all grasp Ron Paul's plan. The others, especially Santorum's, get much more complicated around individual rates, capital gains, overseas corporate rates and deductions. I'd planned to spend a lot more time analyzing these until I was reminded that none of this matters.

Romney presented his plan in Michigan on Feb. 24 and casually mentioned his devotion to that state's automobile companies.

"I drive a Mustang and a Chevy pickup truck. Ann drives a couple of Cadillacs, actually. And I used to have a Dodge truck," Romney noted.

As soon as I heard this, I knew that public discussion of complicated tax policy wasn't going to happen. The Big News would be that Ann has two Cadillacs, and the obvious explanation that she keeps one each at her East Coast and West Coast homes doesn't help with those who can't get over the fact the Romneys are rich. I don't pretend to understand this media non sequitur, from capital gains to Cadillacs. But I moved on from my attempt to compare tax rates to the various plans' effect on the national debt.

Using dynamic models, tax cuts can create jobs and lead to revenue growth. Whether they reduce deficits depends on whether government spending is also cut enough to prevent more debt while we wait for the economy to respond to private-sector stimulus.

U.S. Budget Watch, a nonpartisan group whose mission is "to increase awareness of the important fiscal issues facing the country," has analyzed the candidates' tax proposals. It released a report this week about the potential impact of each plan on the national debt. Its conclusion is that none of the plans, except Paul's, would cut spending enough to avoid more deficits.

Using 2021 as the target year, Budget Watch claims that Gingrich would increase the debt by $7 trillion, Santorum by $4.5 trillion and Romney by $2.7 trillion.

Maybe. Between us, I don't think anyone can analyze what will happen if a president is actually addressing the economy, instead of trying to "spread the wealth around." So much of economics is psychological. Just having a serious president taking the national debt seriously will have an impact.

So I'll take the quick and easy position that, if Romney's plan increases the deficit the least, it's the best plan, except for Paul's, which is far too radical until it becomes inevitable. Continue to delay the tough decisions, and they will be made for us.

The only decision we Massachusetts voters can make right now, though, is for whom we will vote in the Super Tuesday primary on March 6.

Republicans must decide which of their candidates can beat Barack Obama. We Massachusetts independents can take a Republican ballot, too.

I've watched every debate, and studied all the tax plans. The Republicans' are all better than the president's, which, among other wrong things, wants to increase taxes on the oil companies, who would respond by increasing our price at the pump.

For me, it comes down to who has the best chance to defeat Obama in November and turn around the economy, then reduce deficits and stabilize the national debt before it's too late. I still think that's Mitt Romney.


The comments made and opinions expressed in her columns are those of Barbara Anderson
and do not necessarily reflect those of Citizens for Limited Taxation.


Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and other Eagle Tribune newspapers; bi-weekly in the Tinytown Gazette.


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